Moving at the speed of innovation

“Moving at the speed of innovation” is a new study from PwC that discusses the tools and talents of technology-enabled Internal Audit.

Let me share with you the highlights of this study, which just got off the press, and let me keep you, internal auditors, on board on how more advance internal audit functions are creating departments with a cohesive technology and talent strategy.

Surveying more than 2,500 board members who are senior executives and audit professional across 92 countries, PwC’s State of the Internal Audit Profession report shows that 75 percent of Internal Audit teams who have strong technology-and talent-enabled strategy in place are contributing significant value to their organizations.

We may have been exposed only to a limited number of technologies, such as enterprise resource planning, cloud, big data and analytics. But the list of technologies that Internal Audit must understand is growing fast.

Our style and approaches to our work will change. What has been done in the past may no longer be as effective as we thought it would be, or that we may no longer be meeting our audit objectives. We need to seriously think about innovative tools and upscaling our skills and methods of providing assurance.

What benefit can we obtain from this study? How can we relate to PwC’s Global CEO Survey results indicating that the speed of technological change is a top concern among our CEOs here in the Philippines? Going through the study in detail will give us valuable insights on how it will impact our roles in our organizations. It can help us reassess the expectations of our boards of directors on having the right perspective on risks that new technologies bring and on the controls in place to appropriately manage those new risks.

So what is out there? Is Internal Audit equipped for the future? The study showed that some Internal Audit functions (comprising 14 percent) are already advanced in their technology adoption and are known as the “Evolvers.” These Evolvers are not just found in large organizations or in regulated industries but across different industries, company sizes, and geographies. While Evolvers are a small group, they set the example: nearly half (46 percent) of Internal Audit functions are following the Evolvers’ technology adoption but at a slower pace (“Followers”). The remaining 37 percent of Internal Audit functions lag in technology adoption and are considered “Observers.”

The report highlights Evolver characteristics, which make these top-performing Internal Audit functions stand out.

These include:

1. The ability to move technology and talent in lockstep. Evolvers are advanced in their technology use and far outperform their peers on talent: 72 percent of Evolvers excel at obtaining, training, and sourcing the talent they need, compared with 46 percent of Followers and 29 percent of Observers.
2. Focus on building a deliberate strategy. Of the Evolvers, 85 percent focus on technology enablement as part of their strategic plan, compared with 61 percent of Followers and 38 percent of Observers.
3. Leveraging technology-enabled collaboration tools. Internal Audit functions that are advanced in their use of collaboration tools stand out from their peers in managing stakeholder relationships and cost efficiencies.
4. Self-service in data extraction. More than 80 percent of Evolvers are self-sufficient in their data extraction.
5. Use of tools and skill sets for enhanced productivity. From advancing data analytics and monitoring, to leaning into intelligent automation, Evolvers are more often investing in technology risks and tools training than their peers.

These new discussion points will make us rethink about the answers to these following questions:

• Has your Internal Audit function developed a strategic plan? If so, has the plan been shared with stakeholders, including the Audit Committee? Do stakeholders agree with the direction outlined?
• Has your Internal Audit function identified or made any long-term investments such as in technology, data analytics, or advance trainings to enhance the function’s capabilities?
• How mature is the Internal Audit function? Is there a continual process developed as part of our audit methodology? Do we embrace sourcing options and/or leverage on external subject matter expertise to elevate insights and generate innovative recommendations in specialized areas?

Actions to take today as quoted in the study: assess where Internal Audit stands in its tech-enabled foundation, fuse technology and talent into a single strategy, and innovate and be revolutionary whenever possible.

Our level of readiness as internal auditors will lead us to our increase relevance and reinforce our role as trusted advisor.